Economics Problem: Chapter 8
The city of Gruberville is considering whether to build a new public swimming pool. This pool would have a capacity of 800 swimmers per day, and the proposed admission fee is $6 per swimmer per day. The estimated cost of the swimming pool, averaged over the life of the pool, is $4 per swimmer per day. Gruberville has hired you to assess this project. Fortunately, the neighboring identical town of Figlionia already has a pool, and the town has randomly varied the price of that pool to find how price affects usage. The results from their study follow:
- If the swimming pool is built as planned, what would be the net benefit per day from the swimming pool? What is the consumer surplus for swimmers?
- Given this information, is an 800-swimmer pool the optimally sized pool for Gruberville to build? Explain.